TRANSCRIPT
Susan Spence, Chair, ISM Manuf (00:05.051)
3.3 positive comments to every negative. That’s down to 2.2 positive to every negative. And then employment, the comments related to hiring versus not hiring. Last month 1.5 to 1 positive. That’s down to 1.3. Those three sentiments along with those three indexes, plus prices staying at 71.1 versus coming down like they have been, have me a little concerned.
And this survey was already in before the Canada tariff discussion started. So we haven’t even seen that effect. My conclusion is that the ongoing war, which folks were hoping were gonna you know was gonna have a quick end, the ongoing war, the continued inflation and pricing, even though prices have stayed at 71.1 for an index, we still have inflation.
has got me a l a bit concerned and yeah just don’t want to see the good eight month trends start to turn around which you know if if we have drops like that next month and the month after we’ll we’ll be back in contraction in short order which nobody wants. So fingers crossed that doesn’t happen. you know i it’s it’s not like COVID when it was out of humans control. So
So hopefully folks are paying attention to that and taking the warning for what it is. We’re not crying wolf. We’re not saying that we have a contracting economy, we don’t, but the slippage is there, and I’m not certain it’s just a bubble, given those other factors.
Lewis A. Weiss (01:47.476)
Yeah.
Lewis A. Weiss (01:51.807)
Well, I’m aware that the ISM has seasonally adjusted numbers. That being said, in the thirty some odd years that I’ve been following the ISM, to me July, August in particular always seem to ha have some type of a slowdown. And even though the slowdown is just less growth as opposed to total slippage.
Susan Spence, Chair, ISM Manuf (01:58.219)
Mm, mm hmm. Mm-hmm.
Susan Spence, Chair, ISM Manuf (02:13.263)
Mm-hmm.
Susan Spence, Chair, ISM Manuf (02:18.457)
Mm-hmm. Mm-hmm. Mm-hmm.
Lewis A. Weiss (02:21.182)
So my prediction for whatever that’s worth, September will come back to life, being that that’s really the beginning of the next and last quarter of the year. So what what’s your thought on that, Susan?
Susan Spence, Chair, ISM Manuf (02:35.323)
Mm-hmm.
You know, may maybe so. And again, if I didn’t see that change in sentiment, I tend to be less worried. But those two factors together ha they have me concerned. so we’ll I mean we’ll see. I mean, I’ve been doing the report for a year. Last year was a very unusual year because of all the chaos going on. so w we’ll see. I certainly would feel better if if we were out of the war, if price
Lewis A. Weiss (02:47.176)
Yeah.
Susan Spence, Chair, ISM Manuf (03:07.426)
We’re dying down a little more. yeah.
Lewis A. Weiss (03:12.336)
Automotive has me a little concerned being that the US sells sixty thousand cars to Canada and that may be going by the boards.
Susan Spence, Chair, ISM Manuf (03:26.457)
Maybe, you know, the automotive folks are competing for some of the same components that the data centers are gobbling up. They’re having trouble getting them. They’ve got aluminum and steel tariffs. So yeah, and you know, you have that fact. So not not a positive development for sure. We’ll see we’ll see what happens here.
Lewis A. Weiss (03:34.676)
Mm-hmm.
Lewis A. Weiss (03:48.553)
Here here in New Jersey we have a fair amount of Canadian tourism in New Jersey. They all come to the Jersey Shore, as opposed to going to Florida. And from people that I’ve been in touch with, the Jersey Shore is suffering this year because of Canadian tourism dried up. So that’s not a good sign either.
Susan Spence, Chair, ISM Manuf (04:08.923)
Yeah.
Susan Spence, Chair, ISM Manuf (04:16.601)
Yeah, yeah, yeah.
Lewis A. Weiss (04:18.356)
So so what what else do you see as I know the metals industry is experiencing higher pricing and some shortages. So and that plays a big part in heavy manufacturing.
Susan Spence, Chair, ISM Manuf (04:28.357)
Yeah. Yeah.
Susan Spence, Chair, ISM Manuf (04:35.033)
Sure it sure does. if you look at the excuse me, the commodities, right? up and down. We had twenty four commodities up in price, two down, and eight in short supply. There’s there’s certainly a connection between shortened supply and up in price, especially around memory and circuit boards and electronic electrical components. there’s been a couple comments in the last few months from the appliance industries competing with the data centers, competing
with the automotive and there was a interesting article I didn’t fully read about
the period of time when China stopped and banned chips from being exported and how quickly the supply chain was affected by that, you know, the North America supply chain. So you know, it’s not forty items up in price anymore like it was a few months ago. It’s 24, but you know, is there an inflation issue? You know, the consumer sentiment, University of Michigan, that was doing a little nice turnaround, right? A month over
Lewis A. Weiss (05:35.39)
Significant. Yeah.
Susan Spence, Chair, ISM Manuf (05:43.735)
month it was turning positive it’s back to the negative I’m sure you saw that so you know the the pricing continues to be an issue and we will we will see what happens there certainly additional tariffs especially at 50 percent is not gonna help the case
Lewis A. Weiss (06:01.653)
Course. you mentioned a moment ago about data centers, and I ran across a very interesting report about data centers being constructed underwater in the North Sea by Sweden. And it’s it’s amazing, and and we haven’t heard anything about that here, at least for East Coast, West Coast.
Susan Spence, Chair, ISM Manuf (06:18.757)
Hmm. Interesting.
Lewis A. Weiss (06:30.312)
But it’s a very interesting technology. There’s little or no environmental impact, except maybe on fish, but they don’t complain much. and there’s less wear and tear on equipment and you know, on and on and on. It’s just plus plus plus. And it’s a company in Sweden that’s doing this. They already have one data center underwater.
Susan Spence, Chair, ISM Manuf (06:51.427)
Mm.
Lewis A. Weiss (07:00.606)
which is a positive. And you know, we may come to see that as an alternative to what we see going on in the Midwest with all of the citizenry reacting negatively to data centers.
Susan Spence, Chair, ISM Manuf (07:15.193)
Yeah, yeah. I hadn’t heard that. there’s sure a lot of real estate down there. you know, and environmental impacts. Sometimes I feel like Europe is paying a whole lot more attention than maybe we do here. yeah, the the whole electrical load and my goodness, something’s gotta get solved because it’s it’s this is not this is not a blip. Data centers are here to stay and you know, it’s like the second revolution.
or evolution or whatever.
Amy Nicklaus (07:47.569)
I mean, I don’t know about you, but I mean I’ve been to a a boat, you know, dock before. Like, you know, the erosion that you see, like I salt water is like the enemy of anything that we’re talking about. We’re talking about steel and aluminum. So that would be very interesting to see how that would function because that’s like literally what erodes those those particular pieces.
Susan Spence, Chair, ISM Manuf (08:02.362)
I don’t know. Don’t know how they’re doing it, yeah.
Lewis A. Weiss (08:15.316)
Yeah, well it should
Susan Spence, Chair, ISM Manuf (08:15.429)
So it’s not it’s a total underwater data center, not not like an oil rig where the platform’s above the water. Yeah.
Lewis A. Weiss (08:21.234)
No, no, no. It’s underwater. And what’s what’s even more interest
Amy Nicklaus (08:25.636)
I don’t know how that I mean it would be interesting. I can also see the you know the activist for marine life and like all of the I mean that would be green peas will be on that one for sure.
Lewis A. Weiss (08:31.566)
Even what’s more interesting
Susan Spence, Chair, ISM Manuf (08:36.559)
Green peace, here comes your boat. Yeah. Yeah.
Lewis A. Weiss (08:40.754)
Even more interesting than the technology of underwater data centers is that they will use wave technology to generate electric power to run the data centers. So it’s a it’s two modern technologies and the wave technology there is already working up in the North Sea. And some some of the countries ten, fifteen percent of their power is already coming.
Susan Spence, Chair, ISM Manuf (08:54.063)
Yeah, yeah, yeah, yeah, yeah. Makes sense. That’s fascinating.
Susan Spence, Chair, ISM Manuf (09:09.145)
Well,
Lewis A. Weiss (09:09.726)
From wave technology.
Amy Nicklaus (09:11.544)
Isn’t SpaceX also doing like coming up with these technologies to actually host these data centers in space?
Lewis A. Weiss (09:19.38)
That may be a little bit more expensive to create.
Susan Spence, Chair, ISM Manuf (09:23.387)
You know, well see, don’t you wish you could live for a thousand more years to see it all?
Amy Nicklaus (09:24.516)
You never know.
Lewis A. Weiss (09:28.468)
I’m not sure I want to see what a thousand years from now looks like.
Susan Spence, Chair, ISM Manuf (09:34.203)
I I still you know, I sit out on the patio at night and we have nice fire going and you look up and it’s like used to look at shooting stars and now it’s like Starlink and satellites and every ten minutes and you know it’s pretty cool and then after a while it’s like it’s kinda a little creepy, but you know, we have these wonderful communications because of it. Anyway. But we digress. Anyway. Yeah.
Amy Nicklaus (09:56.898)
I’m ready to digress back to a flip phone. That’s where I’m at.
Lewis A. Weiss (09:57.074)
Yeah.
Lewis A. Weiss (10:00.885)
That’s what my wife wants, the old Motorola flip phone.
Amy Nicklaus (10:03.843)
What I want. If we could just go back to the flip phone, life would be so much simpler for everyone. I’m w I’m all for it. Yeah, we could all probably all get the parts for those two.
Susan Spence, Chair, ISM Manuf (10:06.523)
Sure.
Lewis A. Weiss (10:09.329)
that was a Star Trek thing.
Susan Spence, Chair, ISM Manuf (10:13.881)
Yeah, we probably could.
Lewis A. Weiss (10:15.102)
So let’s get to some of the negative positive comments ’cause I always find them to be quite interesting.
Susan Spence, Chair, ISM Manuf (10:19.438)
Yeah.
Yeah, yeah.
Lewis A. Weiss (10:31.038)
Okay.
Amy Nicklaus (10:32.752)
So it looks like the commentary kind of mirrors that of recent months with you know price challenges and commodities like being heavily consumed by AI. I mean, I think we’d already touched on that. Iran, obviously, is is still ongoing. So that’s the same it seems to be the same sentiment there. you know, one of the things that I noticed was that
Susan Spence, Chair, ISM Manuf (10:46.778)
Yeah.
Susan Spence, Chair, ISM Manuf (10:54.714)
Yeah.
Amy Nicklaus (11:00.414)
somebody did say that volume is definitely consistent, but they’ve got their main customers shifting production from US to Mexico. So and that was for transportation equipment, I believe. So that was that was an interesting interesting comment.
Susan Spence, Chair, ISM Manuf (11:07.129)
Yeah. Yeah.
Susan Spence, Chair, ISM Manuf (11:12.367)
Yep. Yep. That’s the last comment.
Susan Spence, Chair, ISM Manuf (11:20.217)
Yep. You know, it was a short comment.
Transportation equipment’s one of the big six, so we always like to have a number of comments from men. But you know, the footprint coming back to the US, I get asked about that from time to time. It’s like no evidence here, at least from these companies. you know, the the speaking of positive to negative, this month fifty eight percent of the general comments were negative, and I’ve been breaking down the negativity percentages, and these go way past a hundred percent because typically a comment’s gonna
mention tariff war price all at once. So last month 18% of the comments mentioned tariffs and it had been low for a while. It jumped to almost 30
So people are, you know, they’re they’re waiting for it, right? And the replacement tariffs are on their mind. The comments mentioning Iran war, 30%. There’s still 57% of those comments mentioning price volatility. And the percent of comments mentioning lead time, last month was 22%, it’s forty-six. So lead time and prices, you know, are the biggest negativity comments, but the tariffs have jumped back in there. So, you know.
In an otherwise good report of expanding, you know, you see the alarm starting again, and then we’ve got a couple key indexes dropped, and then we’ve got a tamping down of positive sentiment on production and new orders. So that is why this may feel like a negative spin. It’s not meant to be, it’s meant to be you gotta watch it, right? Things could start to erode fairly quickly here, and I believe it really does depend.
Susan Spence, Chair, ISM Manuf (13:05.917)
on you know what are the stances gonna be on trade policy, maybe a little less on what’s gonna happen with the Fed and inflation, but you know, and interest rates. But inflation is, you know, it it’s an issue. And sentiment is, you know, consumer sentiment like the UMISH report talks about, you know, it was it was repairing itself a little bit. Not this month.
Lewis A. Weiss (13:30.046)
But you know, since the report came out a couple hours ago, I had opportunity to check a couple of the online commentaries by various news resources. And they all put the negative spin on it. You know, the ISM index went down, it’s blah blah blah. yeah, it went down from a faster growth. It didn’t go down to the point where it’s going backwards. So I
don’t quite see it the same negative, but I I agree with you that it’s let’s wait and see what happens next month.
Susan Spence, Chair, ISM Manuf (14:05.85)
Yeah.
But for sure for sure it’s a warning, you know. I mean my if if anyone had to pick a sentence of what is Sue’s sentiment, Sue’s sending up warning flags. I am. I am. And I’m I’m naturally I tend to be less risk taking, but you know, if I see something good happening, I’m gonna mention it and and it is it is expansion, but I don’t forget what happened last year. And I I wanna remember that this doesn’t even yet contemplate
Amy Nicklaus (14:06.672)
It definitely.
Lewis A. Weiss (14:16.604)
Mm-hmm.
Susan Spence, Chair, ISM Manuf (14:36.541)
This latest Canada trade issue. And can and what’s probably on the minds of these folks is are we gonna, you know, are is there more to expect there, even though the Supreme Court has ruled on tariffs, can we expect more of the same? Are we gonna have a situation that was starting to repair despite the war, start to reroot again? Because on top of that, and on top of that, so
Amy Nicklaus (15:02.426)
It sounds almost like this this past report’s comments were more of a like a trauma response based on fear from the past l that as than it was as far like it’s just like a trigger of my god, what’s the commas opposed to being able to be you know, see this the growth that’s there to some degree.
Susan Spence, Chair, ISM Manuf (15:10.895)
Maybe. Maybe. It’s a trigger, right? Could be. Yeah.
Susan Spence, Chair, ISM Manuf (15:19.707)
Yeah. I mean they they see it and I wanna remind folks we still have a really good semi forecast. We have a good forecast from May. but
Don’t forget what happened last year, you know. I mean you don’t want it to overshadow everything, but I you know the people that need to be listening aren’t the guys that are taking this survey. It’s the folks that believe in the report, and you know, there are hundreds and hundreds of companies, and there’s hundreds and hundreds and hundreds of comments. There’s 18 sectors. So, you know, the uncertainty from last year really hurt. And people weren’t hiring and they weren’t investing and they didn’t reshore and they didn’t expand footprint. You don’t
I don’t want that to happen again for the same reasons. So
Lewis A. Weiss (16:08.928)
as you know, I’m a bit of a news hound and over the last couple of days or since the Canadian tariffs went into effect, I was listening to various reports from various states along the border Maine, New York, Michigan, Minnesota, and those states. they’re all scared to death.
And rightly so, their economies have some significant percentage of their monthly business transactions is because of Canada. So it could be somewhat catastrophic for them.
Susan Spence, Chair, ISM Manuf (16:48.794)
Yeah.
Susan Spence, Chair, ISM Manuf (16:53.36)
Yeah.
Amy Nicklaus (16:53.87)
I think that Peter, our editor for the news on Manufacturing Talk Radio, actually did a piece on that if that the tipi for a typical vehicle in Michigan, built in Michigan and the states up north, there are some pieces that go back and forth between Canada and the US more than nine times before they get put into an actual vehicle. which I thought was
Susan Spence, Chair, ISM Manuf (17:16.409)
Yeah, yeah, yeah, yeah.
Amy Nicklaus (17:21.998)
really very interesting because it wouldn’t just affect, you know, obviously the jobs that would be, you know, in Canada but also, you know, very much the manufacturing plants where it’s amazing how many times they touch everything.
Susan Spence, Chair, ISM Manuf (17:30.469)
Sure. Yeah, I read
I read that too and having spent thirty five years you know, all but ten of them in manufacturing, I work for aerospace company, United Technologies, you know, you source not always just based on the lowest price, but you’re sourcing a component and then an assembly and you know, you follow that supply chain down six, seven levels and you know, i years ago, right? This it’s not like it’s all vertically integrated. I mean
I you you just can’t afford to do that anymore. So that doesn’t really surprise me. And the question is there’s a term I forget it at the moment, but there’s a question where you don’t want to stack tariffs on top of tariffs on top of tariffs, but you know, it’s it it can be issues. That’s why freight cost, you know, freight can cost a lot in any event. And and I have to start wrapping up, guys, just
Amy Nicklaus (18:29.806)
No, no problem. Well, worth thank you for being on.
Lewis A. Weiss (18:30.676)
Okay. Well, give us your give us your final words, where we’ve been and where we’re going.
Susan Spence, Chair, ISM Manuf (18:35.351)
yeah, so we’ve had a nice run, six to eight month run, and I wanna continue on the trend of you know what the May semi forecast told us, which is optimism.
about inflation, I’m worried about the next round of tariffs, and I continue to be worried about the war. you know we’ve been at the peace table a few times, so you know years ago you say war is good for business. Well
Depends on the business, but it’s not good for the world, that’s for sure. And that is, you know, we just we need some certainty. We need to be able to get our goods, we need to not be paying, you know, double and triple the price. So and we’ll see next month and I’ll be back to talk again. All right. Thank you. Bye bye.
Lewis A. Weiss (19:24.2)
You bet. You bet. Be well. Bye bye.
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